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China's minister cools yuan revalue talk
Updated: 2005-05-06 09:06

The Japanese yen paused after a month-long rally on Thursday as comments from China's finance minister dampened wild speculation that Beijing was about to revalue its currency, the yuan.

Financial Minister Jin Renqing answers question at a press conference of the third plenary meeting of the 10th National People's Congress on March 9, 2005. [newsphoto] 
Speaking on the sidelines of an Asian Development Bank meeting in Istanbul, Chinese Finance Minister Jin Renqing said: "We will actively and prudently push forward this reform but I believe under the current situation that speculation on the renminbi (yuan) exchange rate is very hot, that pushing forward this reform is very difficult."

The Japanese yen has gained alongside other Asian currencies in recent weeks on growing speculations that China would relax controls on the yuan during this week's Labour Day holidays and let the currency strengthen.

The yen hit a six-week high of 104.15 yen to the dollar on Wednesday but eased after China's finance minister said intense speculation about yuan rise was making it difficult for China to push forward on currency reform.

Financial analysts said China's reluctance to let speculators profit from any currency change was well known and many were advising clients to stay with bullish Asian currency positions for now.

"The comments from China may have dampened speculation of a yuan revaluation over the Labour Day holiday but I think people will wait until this weekend before taking positions off the table," said Paul Robson, currency strategist at RBS Financial Markets.

The euro was a touch firmer against the dollar at $1.2970, extending gains made earlier this week as traders bets that the US Federal Reserve could get more aggressive in raising U.S. interest rates this year.

The U.S. central bank raised rates on Tuesday for an eighth consecutive time, bringing its key lending rate to 3.0 percent.

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